# Pls... reply fast Q. On 31st March, 2014, the balances in the Capital Accounts of Saroj, Mahinder and Umar after making adjustments for profit and drawings, etc, were Rs.80,000, Rs.60,000 and Rs.40,000 respectively . Subsequently, it was discovered that the interest on capital and drawings has been omitted.     (a) The profit the year ended 31st March, 2014 was Rs.80,000.     (b) During the year Saroj and Mahinder each withdrew a sum of Rs. 24,000 in equal instalments in the end of each month and Umar withdrew Rs. 36,000

Dear Student,

 Journal Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs) Saroj’s Capital A/c Dr. 2,350 Mahinder’s Capital A/c Dr. 1,300 To Umar’s Capital A/c 3,650 (Profits wrongly distributed without providing interest on capital and drawings, now adjusted)

Working Notes:

WN1: Calculation of Opening Capital

 Particulars Saroj Mahinder Umar Closing Capital 80,000 60,000 40,000 Add: Drawings 24,000 24,000 36,000 Less: Profits (80,000 in 4 : 3 : 1) 40,000 30,000 10,000 Opening Capital 64,000 54,000 66,000

WN2: Calculation of Interest on Capital

WN 3: Calculation of Interest on Drawings

WN 4: Calculation of Profit Share to be credited

Profit available for distribution among partners = 80,000 – 18,400 + 2,000 = Rs 63,600

 Statement Showing Adjustment Particulars Saroj Mahinder Umar Total Interest on Capital 6,400 5,400 6,600 18,400 Interest on Drawings (550) (550) (900) (2,000) Profits to be distributed 31,800 23,850 7,950 63,600 Total (A) 37,650 28,700 13,650 80,000 Less: Profits wrongly distributed (B) 40,000 30,000 10,000 80,000 Net Effect (A – B) (2,350) Dr. (1,300) Dr. 3,650 Cr. NIL

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